Below is an example of the information provided to subscribers during the trading day. By 330pm the final update is posted, with any trades noted.
Monday, 7/29/02: Sold SP500 index fund at the close. Price of index: 898.96
Thursday, August 01, 2002 at 240pm: the consensus seems to suggest a dip followed by a rise. All the index fund ratio models suggest correction today and tomorrow. NYSE internals suggest that today's weakness could extend into tomorrow, followed by a rally in AV and AI and a drop in DV and DI. Currently the NYSE is about 3:1 in favor of DV, so this is in line with predictions. NYSE NH and NL predictions are less clear, but essentially predicting fewer highs and more lows.
The SP500 OHLC ratios all support weakness now, followed by a rally in next 2 days. TRIN is at 2.1 as of 240pm, which coincides with predicted rise for TRIN and today's weakness. VIX has also shot up to 40 or about a 50% increase from previous day, as predicted for today and correlating with today's weakness. These both suggest a turning point.
All SP500 ratio models suggest weakness today and possibly tomorrow. The price pattern models, however, are less clear and show weakness over the range of 8/2 to 8/6. The shorter range SP500 and OEX suggest support after a short drop, so that's bullish given today's weakness hopefully tomorrow's as well. After 8/6 it starts to look less clear.
We are down 21 points on the SP500 cash index as of 240pm. My interpretation of the models is that I want to see the market fall off today and tomorrow, and buy tomorrow at the close. Will continue to monitor the market today and post here if I buy in. The only thing that would prompt me to buy would be prices on the SP500 down 40 points, as this would bring prices into the mean range of most of the price pattern models. Currently they are above most price pattern prediction levels. The short range SP500 cash index MTS that I follow, SRBO112, has yet to issue a sell.
Friday, August 02, 2002, 105pm: The OEX index ratio models and short range 1-2 day price pattern predictions suggest a bottom today or Monday….but when one looks at the longer range price pattern predictions, one selloff soon after this. DJIA and NYSE ratio predictions also suggest a bottom today or Monday. Same for SPDR's and NASDAQ.
There is an interesting price pattern correlation in the 20 day SPDR price pattern prediction that seems to confirm this as well. Short range 1-3 day SP500 projections suggest a bottom today or tomorrow at about 840, but 5 day price patterns suggest that we could have further weakness beyond…so perhaps a slight rally, then another selloff.
SP500 ratio models suggest a bottom mite not happen until Monday-Wednesday. In general, for all the price pattern predictions, we are still not low enough below the price pattern line to warrant a strong buy. Bonds are rallying in coincidence with stocks falling, but the price pattern for the 30year Bond is suggesting a downturn which seems to confirm the short term reversal the price pattern and ratio models see.
Both predicted and actual VIX readings have gone back to a high, suggesting the SP500 could turn any day now. As of 123pm the VIX is at about 45, near it's recent highs which were associated with a bottom and rally in the SP500. Calls on the SP500 are starting to creep down and Puts are starting to creep up, although these are lagged one day so it's tough to know what they did yesterday during the sell off. I suspect they continued and now PUTS are high and CALLS are low, suggesting a bottom for the SP500.
NYSE AV is ready to rally after following the predicted downtrend, and the converse is true for DV, so that suggests a bottom. Same goes for AI and DI, with AI showing a rather unbelievable rally in the cards. I attempted to check on this by retraining last night, and got the same result, so we'll let it stand. As of 1:30 pm we have a 2.9:1 ratio of DI beating AI on the NYSE, and 4.2:1 DV beating out AV, all in line with the expected weakness in the price projections for these market internals. NH's and NL's aren't telling us much. TRIN is has gotten weaker still at ca. 2.5 as of yesterday's close but has fallen to 1.5 as of 1:30pm today…..still a respectable point from which to fall, which coincides with short term market rallies as it falls to bullish levels way below one. Yahoo's TICK is a bearish -595 right now….trending down all weak to a point where it may indicate we're ready for a rally.
All the sector ratio predictions are in agreement for a rally starting Monday.
OEX put/call ratio is bullish…similar levels to where we were about 7/19-7/22 when we had the nice rally.
So, the net of all this is that I'd like to see the market down at least 20 points near the close, at which point I would get in and wait anxiously for a sharp rally on Monday. Will keep and eye on the market between now and 330p and post here if I get in. I'd be much happier if the market dropped 40 points to bring it well below the downtrending 4-6day SP500 index price pattern projection lines.
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